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- Humana (HUM) rose roughly 12% to 16% after the 2027 ratings put 95% of its Medicare Advantage members in plans rated 4 stars or higher.
- Alignment Healthcare (ALHC) fell more than 20% after its main California contract slipped to 3.5 stars from 4.
- Industry-wide Medicare Advantage star ratings weakened as tougher thresholds cut the number of 5-star contracts to 15 from 22.
Humana shares surged about 15% after its largest Medicare Advantage contract rose to 4 stars, while Alignment Healthcare fell more than 20% on a downgrade.
Lead
Humana (NYSE: HUM) shares jumped between 12% and 16% on Friday, October 9, 2026, to roughly $437 to $447. The move followed the release of the 2027 Medicare Advantage star ratings by the Centers for Medicare & Medicaid Services on Thursday, October 8. The insurer's largest contract recovered to 4 stars from 3.5. Alignment Healthcare (NASDAQ: ALHC) fell more than 20% after its main California contract dropped to 3.5 stars from 4, below the threshold for federal quality bonus payments.What Happened to Humana and Alignment Healthcare?
Humana's ratings recovered sharply, while Alignment's slid below the bonus line. Humana said 95% of its Medicare Advantage members will be in plans rated 4 stars or higher for 2027, up from 20% in the 2026 ratings. The figure was well above the 60% to 70% range some Wall Street estimates had assumed. Shares had already risen about 13% in after-hours trading on Thursday after the data was published.
The result reverses two difficult years. Humana's share of members in 4-star-plus plans fell from 94% in the 2024 ratings to 25% in 2025. The company lost a lawsuit challenging the 2025 rating calculations in October 2025, then guided 2026 profit below expectations in February.
Alignment moved the other way. The insurer serves roughly 280,000 members across five states, and its largest contract accounts for about three-quarters of enrollment. Projected membership in 4-star-plus plans falls to about 25% from 98%. The company said it will pursue all available administrative remedies and litigate.
Why Do Star Ratings Matter for Insurer Earnings?
Star ratings determine how much federal money an insurer receives per member, because contracts rated at least 4 stars qualify for quality bonus payments. CMS scores plans from 1 to 5 stars on clinical outcomes, member experience and plan performance. Ratings published this month set bonus eligibility for the 2028 payment year.
For Humana, estimates of the 2028 benefit range from about $3 billion to $4.8 billion in additional revenue and bonus payments. For Alignment, the lost bonus is estimated at more than $170 million in 2028. That is a large figure for a company of its size and explains the scale of the sell-off.
Market Reaction Across Insurers
Larger rivals saw smaller moves. CVS Health (CVS), parent of Aetna, slid between 1% and 3%, and UnitedHealth Group (UNH) traded flat to slightly higher near $372 to $376. Both face lower shares of members in top-rated plans. UnitedHealth's 4-star-plus enrollment is estimated to fall to about 67% from 81%, and CVS's to about 70% from 84%. Elevance Health (ELV) and Centene (CNC) were also among the large insurers whose ratings declined, while Blue Cross Blue Shield of Michigan and Devoted Health improved alongside Humana.
Strategic Context: A Tougher Ratings Cycle
The broader picture is one of tighter standards. CMS added new measures, adjusted weightings and raised quality thresholds for 2027. The average star rating across plans fell to 3.99 from 4.01. The share of Medicare Advantage prescription drug plans rated 4 stars or higher dropped to 37% from 44%, and the count of 5-star contracts fell to 15 from 22. About 71% of enrollees nationwide remain in contracts rated at 4 stars or above.
Because the ratings are relative to cut points that moved, Humana's gain reflects both its own operational improvement and a field where peers lost ground.
What Comes Next for Medicare Advantage Insurers?
The next steps are likely to be legal and operational. Alignment has signaled a challenge to the rating, and other plans that lost bonus eligibility may pursue appeals or litigation. Humana faces the task of turning higher expected 2028 revenue into margin recovery, with bids for the coming plan year already shaped by prior ratings. Insurers that fell below 4 stars must decide how much of the lost bonus to absorb and how much to offset through benefit cuts or pricing.
Outlook
The 2027 ratings reset the competitive order in Medicare Advantage. Humana moves from the sector's biggest ratings casualty to its largest beneficiary, while Alignment confronts a revenue gap tied to a single contract. With thresholds tougher across the industry, bonus eligibility has become a sharper differentiator of insurer earnings into 2028.